Investing: I like to go with the flow

Published by Jeff Prestridge on 29 January 2019.
Last updated on 30 January 2019

Drip, drip, drip


Drip, drip, drip. No, I am not referring to the sound of my leaky bath that has caused me much anxiety over recent weeks, culminating in a mini flood under the bathroom floorboards that went undetected for far too long

An episode, by the way, that resulted in a temporary loss of our water supply (not easy to live without, especially when it comes to hygiene). Thankfully, an observant plumber – not always easy to find – saved the day (and the flat below) although I did have to spend a couple of nights begging friends if I could sleep on their sofa (thank you, Lynn and Andrew) while everything dried out.

I digress (nothing new there, I hear you say). Drip, drip, drip is the term I more readily use to describe my long-standing approach to all things to do with investing. Tuck it away – money that is – on a regular basis and then try to forget about it. Deflect all the white noise. Push away all the hysteria telling you to sell and run for the proverbial hills. Instead, invest and hold. The longer, the better.

Not an easy investment mantra to adopt, I know, given all the turmoil in stock markets that we have witnessed in recent months. Turmoil triggered by a horrible mishmash of geo-political, economic and financial events.

In no particular order, the Brexit factor (guaranteed to cause me to break out in a cold sweat), the prospect of a damaging trade war between the United States and China, military posturing (Russia in Ukraine, China in the South China Sea) and the fear of an era of rising interest rates (generally speaking, higher interest rates are not good for equity markets). These are issues that will not all necessarily go away in a hurry.

But I am in it – the investment game, that is – for the long term. I am quietly dripping money into my work pension, squirrelling away a regular monthly sum inside a tax-friendly Isa and diverting a small slice of my salary into an employee share-ownership scheme run by my main employer DMGT.

I could get panicked by the recent slide in DMGT’s share price and the number of brokers who believe the company’s shares are more a ‘sell’ than a ‘buy’. But I am confident that by the time I am able to sell them (without losing attractive tax breaks), they will have picked up in value.

Make ‘drip, drip, drip’ your mantra when you invest

So gentle, gentle. Drip, drip, drip. Quiet accumulation. Nothing that will set the investment world on fire but hopefully I am slowly building the financial foundations for a future when pleasure rather than work will rule my personal waves.

You may well come back at me and say there are financial advisers out there who saw the stock market volatility coming a while ago and recommended that clients move their money into safer havens (cash). Absolutely, but such advisers are few and far between, and charge for their services.  Also, they have only got one half of the investment equation right. Knowing when to get out of the market is fine, but you also need to know when to get back in. Few advisers get both of these halves of the equation right.

Although you might think my investment approach is a little lazy – hold and buy through thick and fine – I prefer to call it low maintenance. In my Isa, for example, I prefer to hold well-diversified investment trusts that throw off a dividend – which can then be reinvested to buy more shares.

By well diversified, I mean trusts that are invested worldwide with exposure to the UK, the United States, Europe and emerging markets. The likes of The Bankers (managed by investment house Janus Henderson) and Edinburgh (Invesco). Trusts that do all the geographic allocation for you.

I also like trusts with a cracking annual dividend growth record – the likes of The City of London (UK focused, also run by Janus Henderson, and 52 years of annual dividend increases) and The Bankers (51 years).

I still keep a watching eye on how my investments are faring – and occasionally I do a little rebalancing, taking profits from the most successful holding and using the proceeds to invest in the lesser performing. But I prefer not to tamper.

The key to building long-term investment wealth is to stick with it. To keep investing when others are warning caution. Investing a little a lot is better than nothing at all.

Drip, drip, drip. Make it your investment mantra.

Jeff Prestridge is the personal finance editor of The Mail on Sunday. Email him at columnists@moneywise.co.uk.

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